Lean Six Sigma Project on Reducing Recruitment Cost by Advance Innovation Group

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This Lean Six Sigma Project done by student from Advance Innovation group which is posted to provide for benchmarking and best practices sharing purposes.

This is a Student project on Reducing Recruitment Cost, submitted for Six Sigma Certification

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Lean Six Sigma Project on Reducing Recruitment Cost by Advance Innovation Group

  1. 1. Voice of the Customer-VOC2D M A I CCustomer CommentsCritical to Quality-CTQ’sInternal Senior ManagementCost of the recruitment for gradeM02 is higher as per target. This isalso effecting the overall cost of thedepartment.Recruitment cost should be less thanRs. 9000
  2. 2. Business caseXYZ is one of the leading BPO Services providers in India withmore than 400 employees and a turnover of Rs 15 Crore, theyhave their HO in Gurgaon and other offices at Bangalore, Pune,Chennai and Mumbai. The HR Department recruit the employeescentrally for all offices. The department has to ensure thatrecruitment is upto the satisfaction to ensure smooth running ofthe business. Since last one year there have been variousinstances of recruitment when employees has recruited on highcost. This has resulted impact on revenue & expenses of thecompany.TeamSponsor• Process Champion• Process Owner• Black Belt• Team MemberProblem StatementSince Last year data shows that the recruitment cost has beenmeet on 64% against the target of Rs. 9000. It might impactour long termbusiness planning with the existing budget and cost of expenses.In Scope : for Grade M02 recruitment by thedepartmentOut Scope : other than Grade M02 recruitmentGoal StatementTo achieve recruitment cost at target of Rs. 9000 for the GradeM02 recruitment. By the 16thJuly 2010.Milestones Target Date Actual dateD 17thJuly, 2012 17thJuly, 2012M 10thAugust, 201210thAugust, 2012A20thSeptember,201220thSeptember,2012I20thOctober,201220thOctober,2012C16thNovember,201216thNovember,2012Project CharterD M A I C
  3. 3. Distribution plan (ARMI)A – Approval of team decisions I.e., sponsor, business leader, MBB.R – Resource to the team, one whose expertise, skills, may be needed on an ad-hoc basis.M – Member of team – whose expertise will be needed on a regular basis.I – Interested party, one who will need to be kept informed on direction, findings.D M A I C
  4. 4. ImproveRecruitment cost ofGrade m02CTQs*Recruitment for Grade M02as per requirement.Recruitment Cost forGrade M02 should lessthen Rs. 9000USL= Rs 9000DD=Cost of recruitment >Rs. 9000Every recruitment forGrade M02 is opportunity*CTQ- Critical To QualityCTQ TreeD M A I C
  5. 5. COPISD M A I CHR will search suitablecandidate internally/externally6CandidateCandidateShortlisted CandidatePositionRequiredDepartmentList ofCandidatesShortlistedCandidateRecruitedCandidateList ofCandidates forinterview
  6. 6. FLOW CHART OF THE PROCESSStartPosition Identified and raised by Department to HRShort listing of resumes by HRinternally/externallyConduct Department interviewOffer Letter & JoiningStopCandidateselectedYesNoConduct HR interview / Verification ofDocumentCandidateselectedYesNo
  7. 7. KPI Operational Definition Defect Def Performance StdSpecification LimitOpportunityLSL USL.ImproveRecruitment Costfor Grade M02The Cost incurred for recruitingfor Grade M02 employees shouldbe less then Rs. 9000Cost is > Rs9000 to hireGrade M02employeesCost should be <Rs 9000 to hireGrade M02employees- Rs. 9000Hiring GradeM02employeeKPI Data TypeData ItemsNeededFormula to beusedUnitPlan to collect DataPlan tosampleWhat Databaseor Containerwill be used torecord thisdata?Is this anexistingdatabaseor new?If new, Whenwill thedatabase beready foruse?When is theplanned startdate for datacollection?ImproveRecruitmentCost for GradeM02continuousTotaltransactionsofRecruitmentof Grade M02EmployeesHiring Cost Rs. Excel Existing N/A N/A01-04-2011to31-03-2012Data Collection PlanD M A I C
  8. 8. Effectiveness & EfficiencyEffectiveness at 100% with 5507 samples is good enough, and we conclude thatthe measurement System is adequate.For the purpose of recruitment cost validation, 5507 Grade M02 have beenverified for the time taken.Procedure Used:• Total 5507 Grade M02 have been taken.• On verification, 2 operators were used to re-verify the Complexity2 Callsand we found that no data points were differently captured in the 5507samples which were re-verified.Effectiveness % = Number of samples where both measurement weresimilar * 100Total Number of samples under consideration= 5507 * 100 = 100%5507D M A I C
  9. 9. Capability AnalysisD M A I CDefectOpportunities perunitNo. OfUnitsTotal No.of DefectsDefectsPer UnitPPM SigmaLevel(ShortTerm)1 5507 1977 0.36 3,58,997.64 1.86The Recruitment cost for Grade M02 is currently running on1.86 Sigma Level (Short Term)
  10. 10. Data Stability AnalysisD M A I CThe RUN chart shows that cluster and trends exists in the data while there areno significant Mixture and Oscillation. This evidently shows that the data is notstable.
  11. 11. Normality TestD M A I CSince p-value is less then .05, hence Data is non-normal
  12. 12. Data Distribution AnalysisD M A I CNormality P value is < 0.005Shape of data Non-NormalSince the data is non-normalso the measure of centraltendency will be median =7500Stability factor = Q1/Q3Stability factor = 5000/9000 =0.55
  13. 13. D M A I C1 sample Sign TestSign Test for Median: Cost As per AgreementSign test of median = 9000 versus not = 9000N Below Equal Above PMedianCost As per Agreement 5507 3530 944 1033 0.00007500The above test shows that the target of 9000 is lying in the CI andsince p-value is <.05, which means there is problem of centering
  14. 14. D M A I CCause and Effect Diagram
  15. 15. Box Plot analysis of Recruitment CostThe stability factor (Q1/Q3) is .550, which means process is likely stable.The data is -vely Skewed as Q3-median < Median-Q1D M A I C
  16. 16. Location wise box plot analysis ofRecruitment Cost D M A I CBox plot shows that Bangalore is paying more the target for Recruiting
  17. 17. Box plot shows that Recruitment Cost for Autoclaims, Enabiling Unit Facility,Enabiling Unit Finance & Insurance is more then Target.D M A I CVertical wise box plot analysis ofRecruitment Cost
  18. 18. Box plot shows that there is no impact on Recruitment cost on horizontals exceptsome extreme cases.D M A I CHorizontal wise box plot analysis ofRecruitment Cost
  19. 19. Designation wise box plot analysis ofRecruitment CostBox plot shows that Recruitment cost is more in Jr. Engineer , Jr. Executive & SCSaand having more variation.D M A I C
  20. 20. Process Type wise box plot analysis ofRecruitment CostBox plot shows that Recruitment Cost for Support & Voice Process is more then target.D M A I C
  21. 21. Source wise box plot analysis ofRecruitment CostBox plot shows that Recruitment Cost is high for Placement Consultant then othersources.D M A I C
  22. 22. Pareto Chart of Recruitment CostD M A I CPareto Chart shows that Mumbai , Travel & Contract Center has highRecruitment Cost.
  23. 23. Pareto Chart of Recruitment CostD M A I CPareto Chart shows that CSA, Placement Consultants & Voice Process has highRecruitment Cost.
  24. 24. Proposed tests according to problemand factor’s data typeD M A I CS.No. Potential Causes Data Type Centring1 Location Discrete Moods Median2 New Vertical Discrete Moods Median3 Horizontal Discrete Moods Median4 Process Type Discrete Moods Median5 Designation Discrete Moods Median6 Source Discrete Moods Median
  25. 25. As per Moods Median Test, Location has significantdifference in median of population, P-value is <.05D M A I CMood’s Median Test on “Location”Mood Median Test: Cost As per Agreement versus LocationMood median test for Cost As per AgreementChi-Square = 570.57 DF = 4 P = 0.000Individual 95.0% CIsLocation N<= N> Median Q3-Q1 --------+---------+---------+--------BAN 327 602 9000 3500 (----*CHN 72 6 5000 3224 (-----------*GGN 535 595 9000 2000 (------*MUM 1194 611 7000 7224 *PUN 1208 357 5000 5000 *---------)--------+---------+---------+--------4000 60008000Overall median = 7500
  26. 26. As per Moods Median Test, New vertical has significantdifference in median of population, P-value is <.05D M A I CMood’s Median Test on “NewVertical”Mood Median Test: Cost As per Agreement versus New VerticalMood median test for Cost As per AgreementChi-Square = 509.70 DF = 15 P = 0.000New Vertical N<= N> Median Q3-Q1All verticals 4 0 1776 1332Autoclaims 14 10 5000 6662Banking & Financial Services 202 12 2750 3224Consulting & Professional Services 45 1 5000 3224Diversified Business Unit 66 0 5000 3224Enabling Unit-Facilities 2 1 5000 13994Enabling Unit-Finance 4 2 5000 10811Enabling Unit-HR 2 0 0 0Enabling Unit-IT 9 0 1776 4112HealthCare 104 94 7500 2250Insurance 848 685 7500 5000Retail & CPG 467 601 9000 2000Shipping & Logistics 85 2 2500 3224Telecom 28 0 5000 0Travel 1157 723 7000 6500Utilities 299 40 5000 3224Individual 95.0% CIsNew Vertical +---------+---------+---------+------All verticals (---*Autoclaims *------------)Banking & Financial Services (*Consulting & Professional Services *Diversified Business Unit (-*Enabling Unit-Facilities (---------*-----------------)Enabling Unit-Finance (---*--------------------)Enabling Unit-HR *Enabling Unit-IT (--*-----)HealthCare *--)Insurance *Retail & CPG *Shipping & Logistics *----)Telecom *Travel *)Utilities *+---------+---------+---------+------0 5000 10000 15000Overall median = 7500* NOTE * Levels with < 6 observations have confidence < 95.0%
  27. 27. D M A I CMood’s Median Test on “Horizontal”Mood Median Test: Cost As per Agreement versus HorizontalMood median test for Cost As per AgreementChi-Square = 419.04 DF = 6 P = 0.000Horizontal N<= N> Median Q3-Q1BizAps 2 0 888 1776Contact Center 1544 1372 7500 4000F&A 515 3 5000 2500Industry Specific BPO 1236 793 7500 6500Legal Services 19 0 5000 3224Support 17 3 5000 4556Technology Services 3 0 1776 3224Individual 95.0% CIsHorizontal +---------+---------+---------+------BizAps (---*--)Contact Center *F&A *Industry Specific BPO *Legal Services (-*Support (------------*Technology Services *------------)+---------+---------+---------+------0 2500 5000 7500Overall median = 7500* NOTE * Levels with < 6 observations have confidence < 95.0%As per Moods Median Test, Horizontal has significantdifference in median of population, P-value is <.05
  28. 28. D M A I CMood’s Median Test on “ProcessType”Mood Median Test: Cost As per Agreement versus Process TypeMood median test for Cost As per AgreementChi-Square = 1701.92 DF = 6 P = 0.000Process Type N<= N> Median Q3-Q1complex Data 2 0 5000 0Complex Data 641 1 5000 3224F&A 482 3 5000 2862Simple data 17 0 2500 1224Simple Data 634 3 2500 724Support 38 15 5000 9371Voice 1522 2149 9000 2500Individual 95.0% CIsProcess Type -+---------+---------+---------+-----complex Data *Complex Data *F&A *Simple data (---*-)Simple Data *Support *Voice *-+---------+---------+---------+-----2000 4000 6000 8000Overall median = 7500* NOTE * Levels with < 6 observations have confidence < 95.0%As per Moods Median Test, Process Type has significantdifference in median of population, P-value is <.05
  29. 29. D M A I CMood’s Median Test on“Designation”Mood Median Test: Cost As per Agreement versus DesignationMood median test for Cost As per AgreementChi-Square = 65.73 DF = 7 P = 0.000Designation N<= N> Median Q3-Q1Associate Engineer 2 0 0 0Associate Engineer- Application Support 1 0 1776 *Associate Engineer - Service Desk 1 0 5000 *Associate Software Engineer 3 0 1776 1776Associate Technology 2 0 5000 0Associate Testing Engg. 1 0 1776 *Asst. Software Engg. 1 0 1776 *CSA 2169 1191 7000 6500Jr.Engineer 1 0 1776 *Jr.Executive 5 3 3388 14300Jr.Software Engineer 1 0 5000 *Jr.System Admin 1 0 5000 *Junior Analyst 1 0 5000 *Junior Executive 17 12 5000 7495SCSa 1 1 6250 7500SCSA 1128 964 7500 4000Trainee Executive 1 0 5000 *As per Moods Median Test, Designation has significantdifference in median of population, P-value is <.05Individual 95.0% CIsDesignation +---------+---------+---------+------Associate Engineer *Associate Engineer- Application SupportAssociate Engineer - Service DeskAssociate Software Engineer (---*Associate Technology *Associate Testing Engg.Asst. Software Engg.CSA *Jr.EngineerJr.Executive (------*----------------------)Jr.Software EngineerJr.System AdminJunior AnalystJunior Executive *------------)SCSa (-------*------)SCSA *Trainee Executive+---------+---------+---------+------0 5000 10000 15000Overall median = 7500* NOTE * Levels with < 6 observations have confidence < 95.0%
  30. 30. D M A I CMood’s Median Test on “Source”Mood Median Test: Cost As per Agreement versus SourceMood median test for Cost As per AgreementChi-Square = 2775.70 DF = 6 P = 0.000Source N<= N> Median Q3-Q1Institute 19 0 0 0Job_Portal 665 0 1776 0Outstation 37 0 7000 1000Placement Consultants 932 2171 9000 3000Rapper 1464 0 5000 2500RAPPER 4 0 2500 1875Walkin 214 0 0 0WNS Carrier website 1 0 0 *Individual 95.0% CIsSource +---------+---------+---------+------Institute *Job_Portal *Outstation *Placement Consultants *Rapper *RAPPER *---------)Walkin *WNS Carrier website+---------+---------+---------+------0 2500 5000 7500Overall median = 7500* NOTE * Levels with < 6 observations have confidence < 95.0%As per Moods Median Test, Source has significant difference in median of population,P-value is <.05
  31. 31. Quality Function DeploymentD M A I CY = RECRUITMENT COSTCTQ Rate (1-5)Plan forHiringthrough HRSearch forNewConsultantsIntorduce ReferalPolicyIntorduceBonusPolicy forHRCentralisedHiringHiringthroughPortalAdv.Sum of allratingsCompletenessMatrixLOCATION 5 3 3 5 5 4 5 25 125DESIGNATION 5 3 3 5 5 5 5 26 130SOURCE 5 5 5 5 5 3 5 28 140PROCESS TYPE 5 3 3 3 3 3 3 18 90DeploymentMetrix55 55 75 75 60 75
  32. 32. Quality Function DeploymentD M A I CY = RECRUITMENT COSTCTQ Rate (1-5) Define Referal PolicyApprovalof ReferalPolicyInitiateReferalPolicyDefineBonusPolicy forHRApprovalof BonusPolicy forHRInitiateBonusPolicy forHRCreate Central HiringProcessExpandHR TeamStartusingmultipleportal forjobpostingStartmorepostingJobs onPortalSum of allratingsCompletenessMatrixIntorduce ReferalPolicy5 5 5 5 1 1 1 1 1 1 1 22 110Intorduce BonusPolicy for HR5 1 1 1 5 5 5 1 1 1 1 22 110Centralised Hiring 5 1 1 1 3 3 3 5 5 4 4 30 150Hiring through PortalAdv.5 1 1 1 1 1 1 4 4 5 5 24 120Deployment Metrix35 35 35 45 45 45 35 35 30 30
  33. 33. Action Plan for QFDD M A I CActionable Items Responsibility Start Date Close DateDefine Referral Policy HR Manager20-05-2012 27-05-2012Approval of Referral Policy Management20-05-2012 29-05-2012Initiate Referral Policy HR Manager05-06-2012 on goingDefine Bonus Policy for HR HR Manager21-05-2012 21-05-2012Approval of Bonus Policy for HR Management21-05-2012 21-05-2012Initiate Bonus Policy for HR HR Manager22-05-2012 on goingCreate Central Hiring Process HR Manager22-05-2012 on goingExpand HR Team HR Manageron going on goingStart using multiple portal for jobpostingHR Executive21-05-2012 on goingStart more posting Jobs on Portal HR Executive22-05-2012 on going
  34. 34. Failure Mode Effect AnalysisD M A I CFalier Modes & Effect AnalysisAction Item Potential Faliue ModeImpact of Faliure Mode onExpected Desired ResultSeverity (1-10)(L - H)Occurance (1-10)(L - H)Detection(Undetectibility)(1-10)(H - L)Risk PriorityNumberRiskManagementStrategyRisk Treatment Plan Responsible TimelineDefine Referal Policy Not Created on timeImplementation of Referral Policyis delayed8 8 2 128 Reduce Ensure created on time HR ManagerPolicy not defined adequatelyReferral Policy is not definedcorrectly8 8 4 256 ReduceDefine and Verify that needs areadequately definedHR ManagerNon availability of concernedresourceImplementation of Referral Policyis delayed9 8 3 216 Reduce Multiple resources are selected HR ManagerApproval of Referal Policy Not Approved on timeImplementation of Referral Policyis delayed8 8 2 128 Reduce Ensure approve on time HR ManagerNon availability of concernedresourceImplementation of Referral Policyis delayed9 8 3 216 Reduce Multiple resources are selected ManagementInitiate Referal Policy Not initiated on timeImplementation of Referral Policyis delayed9 9 3 243 Reduce Ensure initiated on time HR ManagerNon availability of concernedresourceImplementation of Referral Policyis delayed9 9 2 162 Reduce Multiple resources are selected HR ManagerDefine Bonus Policy for HR Not Created on timeImplementation of Bonus Policyfor HR is delayed9 8 3 216 Reduce Ensure created on time HR ManagerPolicy not defined adequatelyBonus Policy for HR is notdefined correctly9 8 3 216 ReduceDefine and Verify that needs areadequately definedHR ManagerNon availability of concernedresourceImplementation of Bonus Policyfor HR is delayed7 7 4 196 Reduce Multiple resources are selected HR ManagerApproval of Bonus Policy for HR Not Approved on timeImplementation of Bonus Policyfor HR is delayed8 8 4 256 Reduce Ensure approve on time Management
  35. 35. Failure Mode Effect AnalysisD M A I CNon availability of concernedresourceImplementation of Bonus Policyfor HR is delayed7 7 3 147 Reduce Multiple resources are selected ManagementInitiate Bonus Policy for HR Not initiated on timeImplementation of Bonus Policyfor HR is delayed8 8 4 256 Reduce Ensure initiated on time HR ManagerNon availability of concernedresourceImplementation of Bonus Policyfor HR is delayed8 8 4 256 Reduce Multiple resources are selected HR ManagerCreate Central Hiring Process Not Created on timeImplementation of central hiringprocess is delayed8 8 3 192 Reduce Ensure created on time HR ManagerProcess not defined adequatelyHiring process is not definedcorrectly8 8 5 320 ReduceDefine and Verify that needs areadequately definedHR ManagerExpand HR TeamNon Availability of concernedresourceHiring is delayed 9 8 5 360 Reduce Multiple resources are selected HR ManagerShortlisted/Selected candidatesnot meeting the requirementsDelay in Employee Selection 8 6 3 144 Reduce Speeding the hiring process HR ManagerSelection Panel not aware ofrequirementsWrong Employee Selected 8 7 3 168 ReduceCreate awareness by knowledgetransferHR ManagerStart using multiple portal for jobpostingNot started in Time Delay in Hiring 7 9 4 252 Reduce Ensure started on time HR ExecutiveSelected portal does not haveenough dataDelay in Hiring 9 8 3 216 Reduce Select muliple portals HR ExecutiveStart more posting Jobs on PortalNon Availability of concernedresourceHiring is delayed 9 6 4 216 Reduce Multiple resources are selected HR ManagerPosting not done in Time Delay in Hiring 8 8 4 256 Reduce Ensure started on time HR ExecutiveJob posted in portal is notdefined properlyWrong Employee Selected 7 8 5 280 ReduceDefine and Verify that needs areadequately definedHR Executive
  36. 36. Pilot ObservationD M A I C• Our team decided to take about 25% of the population i.e. 1217 recruitment to run pilottest.• The team was chosen on the basis of their historical performance for last three months.The top performers were chosen for the pilot project.• The pilot was run for 4 weeks under regular monitoring of HR Manager.• Lessons Learned During Pilot Test• It was observed that the majority of recruitments was done through placementagencies.• It was observed that the HR team was not aware of the Process and TAT.• It was observed that by using centraised HR team, the cost of hiring was reduced.• the HR Team was more enthusiastic after implementation of Bonus Policy and thehiring cost was substantially reduced.•Many employees started giving referrals thereby reducing the hiring cost.
  37. 37. Pilot RunD M A I C• The Pilot project was run for 4 weeks and it was successful.• The following observations were made at the end of pilot test.
  38. 38. Control PlanD M A I CActionable Items Periodicity Owner StatusReasons(If NotDone) ImpactOngoing Updation of BonusPolicy for HRHalf Yearly HR Manager OngoingOngoing Updation of ReferralPolicyHalf Yearly HR Manager OngoingOngoing Review of hiring cost Monthly HR Manager OngoingOngoing Feedback on BonusPolicy from HR TeamHalf Yearly HR Manager OngoingOngoing Feedback on ReferralPolicy from EmployeesHalf Yearly HR Manager OngoingOngoing Search for new jobportals / PlacementConsultantsMonthly HR Manager Ongoing
  39. 39. Post AnalysisD M A I C• After the successful Pilot Run, the team implemented the observations on the HRDepartment.• The Post Analysis was implemented for two months.• Findings of Post Analysis• All the hiring is done by Centralised HR department.• The referral policy is implemented across all locations.• Multiple job portals are being used for posting & hiring.• The usage of placement consultants is reduced.• The cost of hiring is substantially reduced.
  40. 40. Pre – Post AnalysisD M A I CPre AnalysisPostAnalysisThe above graphical summary clearly shows the shift of median as the median hasnow exceeded the target whereas previously median was below target.
  41. 41. Pre – Post AnalysisD M A I CPre AnalysisPost Analysis
  42. 42. Pre – Post AnalysisD M A I CPre AnalysisPost Analysis
  43. 43. Pre – Post AnalysisD M A I CSign Test for Median: Cost As per AgreementSign test of median = 9000 versus not = 9000N Below Equal Above P MedianCost As per Agreement 5507 3530 944 1033 0.0000 7500Sign Test for Median: Post Analysis Cost As per AgreeSign test of median = 9000 versus not = 9000N Below Equal Above PMedianPost Analysis Cost As per Agree 5507 5360 1 146 0.00004700
  44. 44. Capability AnalysisD M A I CDefectOpportunities perunitNo. OfUnitsTotal No.of DefectsDefectsPer UnitPPM SigmaLevel(ShortTerm)1 5507 146 0.265 26511.71 3.43The Recruitment Cost for Grade M02 is running on 3.43Sigma level (short term) post implementation.DefectOpportunities perunitNo. OfUnitsTotal No.of DefectsDefectsPer UnitPPM SigmaLevel(ShortTerm)1 5507 1977 0.36 3,58,997.64 1.86(Post Implementation)(Pre Implementation)
  45. 45. Goal Statement ValidationD M A I CGoal Statement – To Achieve RecruitmentCost less then Rs. 9000 for Grade M02recruitmentAfter pre-post analysis, it has been observedthat we have achieved the targetRecruitment Cost less then Rs. 9000 forGrade M02 recruitment.
  46. 46. Thank You

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